The bears had their chance last week to take the wind out of the bull’s sales. They could NOT. The S&P 500 erased the losses from the previous week and pushed the S&P 500 up 1.16% for the week. Support was held and the bears didn’t even get a false sell trigger.
Longer-Term momentum is of course still positive. International markets did show some signs of life as many equities markets were up for the week, but many international market weekly trends are still negative. The S&P 500 continues to greatly outpace the MSCI All World (ex-USA) Index and US Treasuries. This is why we are and want to continue to focus on the US equities markets. Lastly the Bear ‘o’ Meter continues to read risk on.
When we look at the current holdings, commodities continue to remain in their respective trading ranges. If we can get a break to the upside, we could see a nice move, but we aren’t quite there as of yet. Treasuries…hmm…I’ll tell you, they continue to be stuck in their respective range as well. Each time I think we will be stopped out, they Teddy Turn Around to the upside. I can’t imagine they can keep this up as each time they tag the bottom of the range, they get closer and closer to a bearish continuation move.
The US sectors we like all look positive. The most notable, the Transportation Index, broke to the upside this past week out of the range. This is the type of price action the bulls like to see as the transportation index is one you definitely want to see rising with the general market indices. We’ll see if the bulls can get some follow through this week.
As far as actions for this week, we don’t plan to add any new positions. We will continue to adjust stops up as it makes sense and of course monitor the current positions in case stops are hit. The bulls absolutely want to see follow through this week…if we don’t see follow through, it builds the case for the bears. Have a great week!